Effects of the resilience of energy systems on economic sustainability

Abstract

Enhancing the resilience of the energy system (RES) is critical to build a modern energy system and increase economic sustainability. However, the effects of RES on economic sustainability and the pathways for enhancing RES are not well known. To this end, the study first identifies the determinants of RES using a panel regression model, and then integrates it into the DSGE model based on RES' shock response mechanism. Based on the novel DSGE model, the effects of RES on economic sustainability are assessed and the pathways for enhancing RES are identified. It is found that improving RES is conducive to genuine savings and that the RES can be enhanced by energy transition, infrastructure improvement, research and development investment, and raising the tax rate on traditional energy use. It is concluded that the RES can contribute to economic sustainability because it can mitigate the energy shocks and thus protect the productive foundation of an economic system. The results provide policymakers pathway information for the construction of a modern resilient energy system.